ADDITIONAL ACTIONS ARE
NEEDED TO ENSURE READINESS TO COMPLY WITH THE AMERICAN
RECOVERY AND REINVESTMENT ACT OF 2009 PROCUREMENT REQUIREMENTS

Issued on June 28, 2010

Highlights

Highlights of Report Number: †2010-11-071 to the Internal Revenue Service Deputy
Commissioner for Operations Support and Deputy Commissioner for Services and
Enforcement.

IMPACT ON TAXPAYERS

The Internal Revenue Service (IRS) received an appropriation of
$203 million in American Recovery and Reinvestment Act of 2009 (Recovery
Act) funds.† TIGTA determined that the
IRS did not always comply with Recovery Act procurement requirements and used
annual appropriated funds instead of Recovery Act funds for some
procurements.† As a result, approximately
$385,000 was not available for other IRS mission-critical needs, such as
improving taxpayer service or addressing the tax gap.

WHY TIGTA DID THE AUDIT

This audit was initiated to
determine the IRSí readiness to implement the requirements of the Recovery Act
in planning, awarding, and reporting Recovery Act-funded procurements.† The Recovery Act provided separate funding to
TIGTA to provide oversight of IRS programs.†
This audit was conducted using Recovery Act funds.

WHAT
TIGTA FOUND

The IRS took
some proactive steps before the Recovery Act was enacted in February 2009 and continued to
refine its efforts to plan, award, and report Recovery Act procurements during
the remainder of Calendar Year 2009.†
However, it still does not have the necessary controls in place to
ensure future procurements will comply with Recovery Act requirements.† For example, the IRS has not developed
written procedures regarding Recovery Act procurement requirements, provided
formal training for those procuring goods and services, or dedicated sufficient
resources to track and report Recovery Act procurements.

TIGTA reviewed 10 procurements from the IRSí Recovery Act
Procurement Plans and determined that two did not comply with the new
procurement requirements.†In addition, the IRS used annual appropriated
funds instead of Recovery Act funds for six of the 10 procurements.† The IRS
will continue to be at risk of noncompliance until IRS management provides the
necessary oversight and guidance to IRS program office and procurement
personnel.

One aspect of
the Recovery Actís transparency and accountability requirements does not apply
to IRS contractors.† IRS contractors
receiving Recovery Act funds are not required to report information on
Recovery.gov, including how the funds were used, any jobs created or retained,
and executive compensation package information.†
As a result, the public will not know how IRS contractors used the $31.9
million in Recovery Act funds paid out as of February 19, 2010.

WHAT TIGTA RECOMMENDED

TIGTA recommended that the IRS
strengthen controls for Recovery Act procurements, including developing written
procedures, providing training to both program office and procurement
personnel, and reevaluating the resources assigned to track and report IRS
Recovery Act procurements.

The
IRS agreed with the recommendation.† Once
the Department of the Treasury issues updated guidance, the IRS plans to issue
a new policy memorandum and then meet with IRS operating divisions and program
personnel to discuss the policy.† The IRS
has increased procurement staffing to provide coverage and backup, and it plans
to periodically assess staffing assignments to ensure continued coverage for
Recovery Act procurements.

READ THE
FULL REPORT

To view the report, including
the scope, methodology, and full IRS response, go to: †